TAG Industrial Watch: December 20, 2025

In the midst of the Federal Reserve’s interest rate hike cycle, TAG foreshadowed in the January 2023 issue of the Industrial Watch, “Eventually, the Fed will be called upon to save the collapsing bond market…” While the bond market is not yet in peril, the financial community has already dialed the Fed in recent weeks, and the nation’s central bank did not hesitate to answer. In addition to another 25-basis-point rate cut last week, the Fed announced that it would begin purchasing short-term U.S. Treasuries, starting with $40 billion this month, in order to maintain adequate liquidity in the financial system and keep interest rates low. Although the Fed has cut interest rates on bank-to-bank lending by 175 basis points since September 2024, the interest rate on the closely-watched 10-Year Treasury note is still nearly 50 basis points higher. Just as TAG predicted earlier in 2024, commercial mortgage rates haven’t budged much, with the lending rate on industrial loans still at 6.1% based on estimates from Select Commercial Funding.

Despite the Fed’s intentions, the bank’s new round of monetary inflation will likely lead to even higher interest rates. As indicative of gold’s performance this year, many of America’s trading partners have continued to “dedollarize,” and the Fed’s recent actions will probably accelerate this process. When foreign nations use other currencies (potentially backed by gold in the future) to conduct international trade instead of dollars, it diminishes the international demand for the greenback, which theoretically pushes up interest rates here in America. Since it is usually better to be proactive instead of reactive, industrial investors need not wait for the bond market to change before taking advantage of record-high property values while they last.